Board Resolution for Appointment of Auditor in Casual Vacancy
Board Resolution for Appointment of Auditor in Casual Vacancy:
The term casual vacancy has not been defined under the Companies Act 2013. According to the legal definitions, “Casual” refers to something that happens by accident, without being planned for, or informally, while “vacancy” refers to an empty space. In the context of an auditor, a casual vacancy in his office may develop as a result of death, disqualification or resignation.
Who can fill the casual vacancy in the office of an auditor?
The provisions relating to “casual vacancy in the office of an auditor” are contained in Section 139 of the Companies Act 2013. When a casual vacancy arises in the office of an auditor, it is to be filled by the designated authorities as specified under the law. The provisions in respect thereof are as follows:
| Government Companies, Companies owned or controlled by any Government(s) | Other Companies |
| The Comptroller and Auditor General of India will appoint an auditor within 30 days of arising a casual vacancy. | The Board of Directors will appoint an auditor within 30 days of arising of casual vacancy. |
| If the CAG of India fails to appoint the auditor within the aforesaid 30 days, the Board of directors will make the appointment within the next 30 days. | If a casual vacancy has been created because of the resignation of an auditor, the members will also approve the appointment of the new auditor in an EGM/AGM within 3 months of recommendation by the Board. |
| The new auditor will hold office till the conclusion of the next AGM of the Company. |
Procedure for Appointment of Auditor in Casual Vacancy by Companies other than Government Companies
The following procedure is adopted for the appointment of an auditor in case of a casual vacancy.
For Casual Vacancies other than resignation (because of death, disqualification, etc.)
- Convene a board meeting in compliance with Section 173 of the Companies Act 2013 and Secretarial Standard on Board Meetings issued by the Institute of Company Secretaries of India.
- Obtain approval of the Board of Directors for the appointment of the new auditor by passing a board resolution (within 30 days of arising of casual vacancy).
- If the Company is required to constitute an Audit Committee, obtain the recommendations of such Audit Committee for the appointment of the new auditor.
- Obtain the consent of the new auditor under Section 139 (1) of the Companies Act 2013.
- The Company should inform the auditor immediately about his appointment.
- File Form ADT-1 with the Registrar of Companies within 15 days of the appointment of the auditor.
For Casual Vacancy because of resignation
- The outgoing auditor should file Form ADT-3 with the Registrar of Companies within 30 days of his resignation.
- Convene a board meeting in compliance with Section 173 of the Companies Act 2013 and Secretarial Standard on Board Meetings issued by the Institute of Company Secretaries of India.
- Obtain approval of the Board of Directors for the appointment of the new auditor by passing a board resolution (within 30 days of arising of casual vacancy). Also, pass a Board resolution for convening the EGM/AGM to confirm the appointment.
- If the Company is required to constitute an Audit Committee, obtain the recommendations of such Audit Committee for the appointment of the new auditor.
- Obtain the consent of the new auditor under Section 139 (1) of the Companies Act 2013.
- Convene a general meeting in accordance with the Secretarial Standard on General Meetings issued by ICSI.
- Pass an ordinary resolution in the EGM/AGM within 3 months of recommendation by the Board.
- The Company should file Form ADT-1 with the Registrar of Companies within 15 days of the appointment of the auditor.
- The Company should also inform the auditor immediately about his appointment.
Draft Resolutions for Appointment of Auditor in Casual Vacancy
Given below are the draft resolutions for appointing an auditor in case of a casual vacancy.
Board Resolution for Appointment of an auditor to fill the casual vacancy on account of reasons other than resignation
The Chairman informed the Board that M/s ………………, Chartered Accountants, the statutory auditors of the Company have become disqualified to act as the auditors of the Company resulting in a casual vacancy in the office of auditor. It was proposed to appoint M/s ………………, Chartered Accountants, as the statutory auditors of the Company. The consent to act as an auditor received from them was placed at the meeting.
The Board discussed the matter and after deliberations, passed the below resolution:
On Company Letterhead
Board Resolution
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF (NAME OF COMPANY) IN ITS MEETING (S.NO.) HELD AT (VENUE OF BOARD MEETING) ON (DATE) AT (TIME)
“RESOLVED THAT pursuant to the provisions of Section 139 and other applicable provision(s) of the Companies Act, 2013 and the Rules made thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), and the recommendations of the Audit Committee, consent of the Board of Directors be and is hereby accorded to appoint M/s……………, Chartered Accountants (Firm Registration No……) for filling up the casual vacancy arisen on account of disqualification of M/s……………, Chartered Accountants (Firm Registration No……), the existing auditors of the Company, to hold office as the statutory auditors of the Company till the conclusion of the next annual general meeting of the Company, on such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the statutory Auditors plus reimbursement of service tax, travelling and out of pocket expenses.
RESOLVED FURTHER THAT Mr./Mrs. (Name of Director) and Mr./Mrs. (Name of Company Secretary), be and are hereby severally authorized to sign and file e-forms and returns with Registrar of Companies and to take all such steps and do all such acts, deeds, and things as may be deemed necessary or expedient to give effect to this resolution.”
CERTIFIED TRUE COPY
For (COMPANY’s NAME)
(Name of Director)
Director
DIN: ___________
Date: ___________
Board Resolution for recommendation to appoint an auditor to fill the casual vacancy on account of resignation
The Chairman informed the Board that M/s ………………, Chartered Accountants, the statutory auditors of the Company have resigned from the office of auditors w.e.f. _____ resulting in a casual vacancy in the office of auditor. It was proposed to appoint M/s ………………, Chartered Accountants, as the statutory auditors of the Company. The consent to act as an auditor received from them was placed at the meeting.
The Board discussed the matter and after deliberations, passed the below resolution:
On Company Letterhead
Board Resolution
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF (NAME OF COMPANY) IN ITS MEETING (S.NO.) HELD AT (VENUE OF BOARD MEETING) ON (DATE) AT (TIME)
“RESOLVED THAT pursuant to the provisions of Section 139 and other applicable provision(s) of the Companies Act, 2013 and the Rules made thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), and the recommendations of the Audit Committee, and subject to the approval of members in the general meeting, consent of the Board be and is hereby accorded to appoint M/s……………, Chartered Accountants (Firm Registration No……) to fill the casual vacancy arisen on account of the resignation of M/s……………, Chartered Accountants (Firm Registration No……), the existing auditors of the Company, to hold office as the statutory auditors of the Company till the conclusion of the next annual general meeting of the Company, on such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the statutory Auditors plus reimbursement of service tax, travelling and out of pocket expenses.
RESOLVED FURTHER THAT Mr./Mrs. (Name of Director) and Mr./Mrs. (Name of Company Secretary), be and are hereby severally authorized to sign and file e-forms and returns with Registrar of Companies and to take all such steps and do all such acts, deeds, and things as may be deemed necessary or expedient to give effect to this resolution.”
___________________________________________________
For (COMPANY’s NAME)
(Name of Director)
Director
DIN: ___________
Date: ___________
In accordance with the provisions of Section 139(8) of the Companies Act, the appointment of an auditor in a casual vacancy caused due to resignation needs to be approved by the members within 3 months of the recommendation by the Board. Thus, when the Board, in its meeting, appoints the statutory auditor to fill the casual vacancy on account of resignation, such appointment is subject to the approval of members.
Note: The resolutions given above are only for reference purposes and they should be used only after adhering to the provisions of the relevant Acts and rules (if any) that may be applicable for the time being in force.
You might also like:
